European stocks seesaw after PMIs miss forecast

Credit Suisse climbs after ratings upgrade

LONDON (MarketWatch) — European stock markets ended a choppy day slightly higher Wednesday after the final reading of the euro-zone services PMI confirmed growth in the sector, but fell short of expectations. Investors also remained cautious ahead of the European Central Bank meeting on Thursday.

More broadly, investors digested the latest purchasing managers’ indexes from the euro zone. The final services PMI for the area came in at 53.2, down from the flash estimate of 53.5, but higher than the 53.1 recorded in April. A reading above 50 signals growth.

The composite euro-zone PMI also missed expectations and fell to 53.5 in May, from 54 in April. The flash reading had forecast a 53.9 print.

Growth data from Eurostat also confirmed that picture. The EU’s statistics office said the German economy grew by 0.8% in the first quarter, while the French economy stagnated. For the euro zone, Eurostat said the gross domestic product expanded by 0.2% in the first three months of the year, confirming a previous estimate.

All eyes on the ECB

The data came a day ahead of the highly anticipated European Central Bank meeting, where most economists expect some kind of monetary easing. Consensus is for a cut in interest rates, taking the deposit rate into negative territory for the first time in euro-zone history. Read: How to invest if the ECB cuts rates below 0%

Analysts also predict that the central bank will introduce a package of liquidity measures to boost bank lending, spur growth and fight off low inflation.

The U.K.’s FTSE 100 index
UKX, -0.21%dropped 0.3% to close at 6,818.63. The London benchmark moved a leg lower in midmorning trade after better-than-expected U.K. services PMI added to speculation the Bank of England could lifts its interest rate from a record low as soon as this year. The pound
GBPUSD, -0.0149%
pared losses after the data and traded at $1.6746, compared with an intraday low of $1.6699 ahead of the report.

Wall Street stocks opened slightly lower, after private-sector payrolls data showed disappointing May jobs growth, although the markets erased losses later in the session. The closely watched nonfarm-payroll data are due Friday.

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